Make a lasting difference this festive season

In May, Andrew Forrest made Australia’s largest philanthropic donation, $130 million, to the Forrest Research Foundation at the University of Western Australia.

In the US, billionaires such as Bill Gates and Mark Zuckerberg continue to donate huge sums of money to charitable endeavours. For instance, in November Gates personally donated $100 million to research into Alzheimer’s disease.

The rest of us may not have such enormous amounts of money to donate, particularly during our lifetime, but charitable giving and connecting to communities are increasingly on the radar for Australians.

The festive season is an ideal time to raise the topic of charitable giving with clients. Advisers are often surprised to find out how many of their clients have charitable intentions but are not sure of the best way to achieve their objectives.

Our experience is that advisers who raise philanthropy with their clients develop deeper and strong relationships with clients and often their families, across multiple generations.

A trusted financial adviser can assist clients in establishing a structured, sustainable approach to philanthropy, such as a charitable trust, that can directly support causes and projects within their communities, while maintaining an ongoing advice relationship with the client.

Families tend to gather at this time of year and it can be a good opportunity to discuss the potential to further connect with their communities and with those needing assistance and support. Many philanthropists enjoy involving others in the family in their charitable giving and find this deeply rewarding.

Such involvement and engagement effectively establishes a family legacy into perpetuity. Additionally, instilling the idea of supporting those less fortunate with grandchildren at an early age can be an extremely fulfilling family endeavour.

All charities depend on donations and are very appreciative of them. However, it is regular, recurring giving that provides the most sustained benefit. Charities can confidently implement longer term projects if they know that they are going to receive regular funds.

Additionally, they don’t need to use precious funds and resources for fundraising projects and activities, allowing a much greater portion of funds to be directed to community members in need.

The simplest and most effective way to undertake recurring giving is through ‘structured giving’, via the establishment of a charitable trust, such as a sub-fund in a foundation.

Unlike ad hoc donations or even recurring donations, charitable trusts are designed to grow capital over time, while generating sustainable, consistent income for granting to eligible charities.

Charitable trusts are not only for ultra-wealthy Australians. Many more individuals who are part of ‘middle Australia’ are appreciating that they are comfortably well off and wish to give back during their lifetime.

A trust can be established with an initial irrevocable donation of as little as $20,000. While this may seem a significant amount, all donations made to the trust are tax deductible and the deductions may be spread over five years.

Furthermore, the donor, family and friends can donate additional funds to the trust, which will further grow the capital and therefore the income generated for distribution.

So why not raise philanthropy with your clients during the festive season? What better way for you to better understand their philanthropic intentions, further strengthen your trusted relationship and establish long-lasting relationships across multiple generations, many of whom may choose to maintain and grow the charitable trust long after the original donor passes.

Emma Sakellaris is the executive general manager of Australian Unity Trustees.